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Donald Sussman avoids affordable housing fee by building plush condos

Something smells rotten on Munjoy Hill, and it ain’t the sewage treatment plant.

Last week I received a copy of a letter from Portland Planning and Urban Development Director Jeff Levine to Tom Federle, an attorney who’s represented billionaire financier and Maine media mogul S. Donald Sussman in his real estate “development” activities here. I put quotes around that word because it seems like Sussman has been responsible for more demolition and deterioration than development in the India Street neighborhood, at the foot of the Hill, where he and his wife, Democratic U.S. Rep. Chellie Pingree, have a posh urban crash pad.

Sussman owns more than half a dozen apartment buildings in that neighborhood. As I reported in a January 2012 cover story for The Bollard (“Donald Sussman’s Dumps”), the apartments had been left vacant and in crummy condition for years while Sussman pondered plans for a new development project there. A year after that story appeared, it came to light in this column that the developer Sussman had engaged to draw up plans for the project — a six-story condo complex called Newbury Lofts — was suing Sussman and Federle, claiming they pulled the plug on Newbury Lofts without paying him or others for the work they’d already done.

Illustration/Mike Lewis

Last summer, Sussman had two of his apartment buildings demolished. Each had three units, so the neighborhood lost a total of six apartments that could have housed people of low-to-moderate incomes. The lots have remained vacant for the past year, as have other apartment buildings he owns nearby.

Portland has a law on the books, the Housing Preservation and Replacement Ordinance, that’s intended to maintain the city’s housing stock — “particularly affordable housing for all economic groups,” it states. Developers who take units off the market are required to either pay into a city housing fund dedicated to affordable-housing development or build new units to replace them. When Sussman demolished the six apartments last year, he opted to put up the money: The city has a letter of credit from one of his limited liability companies, ReBeCo LLC, for $385,200.

Two weeks ago, Federle wrote to the city to ask whether Sussman’s obligation under the ordinance could be satisfied by the fact another LLC he controls is an equal partner in a 12-unit condominium project under construction atop Munjoy Hill, at 118 Congress Street. In other words, since Sussman is technically developing six condos, can he get out of paying the $385,200 for affordable housing he owed when he demolished six apartments?

The city’s answer: Sure.

In the June 20 letter I acquired, Levine informed Federle that though the ordinance specifically states the goal of promoting “affordable housing for all income groups,” Federle was correct to point out that there are no “affordability metrics or requirements” governing units developed to replace those demolished.

So what Sussman’s doing is legal, but that doesn’t make it right.

The rationale for the housing-replacement law all but disappears when apartments that would rent for between $750 and $1,000 can be replaced by condos selling for a thousand times as much. The City Council needs to tighten up or close this loophole.

But it’s even more unsettling that neither Sussman nor his partners in the new condo project, called 118 on Munjoy Hill, has publicly acknowledged the fact Sussman owns half of it. His name appears nowhere on the project’s website or in numerous news reports about the controversy its size and design have caused among neighbors — including articles published by the Portland Press Herald, which Sussman owns.

The smiling public faces of the development, Chip Newell and Susan Morris, have been boasting of their intention to live in one of the condos and trying to make 118 on Munjoy Hill seem like a positive addition to the neighborhood.

But why not acknowledge, if not trumpet, the fact a successful financier and philanthropist is an equal partner in the project? Newell said that’s because Sussman is “just an investor,” with no input in the project whatsoever other than money. “We have never listed our investors in any of our marketing materials,” he said.

But could local politics play a role? The city has lost six affordable apartments and over $385,000 that could have helped build more shelter for the poor in exchange for six condos selling for more than $750,000 each. It’s hard to trumpet that in a neighborhood notoriously averse to gentrification. And it must be getting harder for Pingree to keep a straight face claiming to be a champion of progressive causes like affordable housing while she and hubby get richer working against that cause in their own neighborhood.